Abstract

The mechanism of hidden inflation in Soviet industrial growth statistics between 1928 and1950 is described. Hidden inflation arose when new products were substituted for old ones.Substitution biases in Soviet and Western growth estimates are compared; the extent ofhidden inflation in the Soviet figures is estimated. The view that all Soviet growth series wereexaggerated is qualified; the presumption that the lower a figure, the more reliable it must be,is overturned. The Moorsteen paradox, hidden inflation in industry as a whole, but none inmachinebuilding where product innovation was most rapid, is explained.